Judge refuses to extend sale timeline for Solyndra

A Delaware bankruptcy judge on Tuesday refused to extend the sale timeline for failed solar-panel manufacturer Solyndra LLC, which received a half-billion-dollar federal loan guarantee and was once touted by President Barack Obama in support of his administration's economic policies.

In 2009, Solyndra became the first renewable-energy company to receive a loan guarantee under a stimulus-law program to encourage green energy and was said to be a model for creating green jobs. But the Fremont, Calif.-based company filed for Chapter 11 bankruptcy protection this month and laid off its 1,100 employees, spurring investigations both by the FBI and Republicans in Congress.

Solyndra is now eyeing an Oct. 27 auction of its assets, assuming that more than one potential buyer emerges. But the official committee of Solyndra's unsecured creditors argued that the sale process should be extended at least four weeks to drum up as much interest as possible and maximize the return for creditors.

"We are concerned that there is a rush to sale here," said Bonnie Glantz Fatell, an attorney for the creditors committee.

Judge Mary Walrath rejected the committee's request to extend the sale, but she ordered Solyndra to send a representative to an international solar energy industry trade show in Dallas next month. She agreed with the creditors committee that the conference could be a good venue for marketing Solyndra's assets.

Walrath authorized up to $4 million in debtor-in-possession financing for Solyndra, but the company and its secured lenders, including the Department of Energy, argued that it does not have enough cash to devote four more weeks to lining up potential buyers. Given the political firestorm and headlines surrounding Solyndra, anyone interested in the company already knows it's for sale, they suggested.

"The company has been searching for money for a long time. People know about this," said Michael Rosenthal, an attorney representing private investors including Argonaut Ventures I, which holds a 39 percent stake in Solyndra's parent company and is providing bankruptcy financing for Solyndra.

Argonaut is an investment vehicle of the George Kaiser Family Foundation of Tulsa, Okla. The foundation is headed by billionaire George Kaiser, a major Obama campaign contributor and a frequent visitor to the White House, who raised between $50,000 and $100,000 for Obama's 2008 campaign.

Debra Grassgreen, an attorney for Solyndra, argued that the parties who stand to gain or lose the most in the bankruptcy sale are the federal government and "sophisticated financial institutions."

They would asked for a longer sale process if they thought it would help, she said.

But creditors attorney Fatell said a rapid sale process will dissuade potential buyers who don't have enough time to check out the assets or arrange financing.

"We believe that more time can only benefit all parties," she said.

Justice Department lawyer Matthew Troy countered that Solyndra does not have the cash to wait. And he said Solyndra's case is really a "Chapter 22" bankruptcy because the company went through a previous restructuring in February that didn't work.

Under the February restructuring, Argonaut Ventures and another private investment firm, Madrone Partners LP, stand to be repaid before U.S. taxpayers. Congressional leaders have said allowing private investors to move ahead of taxpayers for repayment may have been illegal.

Deputy Energy Secretary Daniel Poneman has said the February restructuring was "entirely legal," according to media reports.

Walrath also ruled that Solyndra must set aside enough money to pay its electric bill for a month, a compromise between the company's request to set aside two weeks' worth and a California utility's request that it set aside two months' worth.